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Housing Market Stunts Air Care Growth

By: Carrie Lennard, Euromonitor International
Posted: July 6, 2009, from the July 2009 issue of GCI Magazine.

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Private label represents a growing threat to brand manufacturers. Already well-established in Western Europe, where they accounted for 13.5% of sales during 2008, private label has no more than a marginal presence in North America, with a market share of slightly more than 2% in 2008. However, downward pressure on disposable income could see private label further erode the market shares of branded products in these mature markets.

In China, Carrefour has launched private label spray/aerosol air fresheners, which could force price reductions for branded products. Brand loyalty does not play an important role in air care markets such as China, where consumers make their purchasing decision regarding air care products on an impulse basis—increasing the threat posed by private labels.

Decorative Fragrances Help Drive Value Growth

In recent years, innovation in air care has increasingly focused on the desire of consumers to enhance the home environment, rather than simply mask bad smells. As a result, new air care launches have tended toward decoration and away from function. This has also led to a high level of technological innovation. Products that alternate fragrances to combat “olfactory fatigue” (when the nose can no longer smell one fragrance), such as Procter & Gamble’s Febreze Mist & Refresh and Febreze Plug & Refresh, are proliferating. These products tend to have high price points, boosting value growth but perhaps also increasing the industry’s vulnerability to an economic downturn.

Emergence of Air Hygiene Niche Could Be Timely

Kobayashi’s Bacterito has been one of the most innovative launches in the air care space in recent years. Launched in Japan during 2007, Bacterito is a spray that produces negatively electrified mist to destroy household germs, and also contains deodorizing agents. It has blurred the distinctions between air care and household antiseptics/disinfectants to create a new niche of air hygiene sprays. Health threats, as exemplified by the spring 2009 swine flu scare, could significantly boost demand for such products.

Poor Ecological Credentials Remain Achilles Heel

Growing environmental awareness on the part of consumers also presents a significant challenge to the industry, as air care has not traditionally been an ecologically friendly category. The industry’s ongoing reliance on non-renewable ingredients and synthetic perfumes are both, if not diametrical, sore points with a segment of consumers, and there is an emerging niche of environmentally friendly products to take advantage of changing demands. Ecover, for example, introduced a new range of room fragrances based on plant extracts and essential oils in 2007. However, the scope for environmental trends is limited in air care as environmentally aware consumers tend to prefer natural smells and are unlikely to use many air care products.